Stein Mart 2012 Annual Report Download - page 6

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PART I
ITEM 1. BUSINESS
OVERVIEW
Headquartered in Jacksonville, Florida, Stein Mart is a national retailer offering the fashion merchandise, service and presentation of a
better department or specialty store. Our focused assortment of merchandise features current-season, moderate to better fashion apparel
for women and men, as well as accessories, shoes and home fashions, all offered at prices competitive with off-price retail chains. Begun
in the early 1900’s as a single store in Greenville, Mississippi, we operated 263 stores in 29 states as of February 2, 2013.
As used herein, the terms “we”, “our”, “us”, “Stein Mart” and the “Company” refer to Stein Mart, Inc., a Florida corporation, and its wholly-
owned subsidiaries.
KEY STRATEGIC OBJECTIVES
Our mission is to provide current season, first-quality fashion apparel, shoes, accessories and home fashion merchandise at prices
comparable to off-price retail chains in a convenient, attractive, easy-to-shop location. We believe our success and future growth will
depend on the consistent execution of the following:
x Having a desirable, current-season assortment of designer, brand name, exclusive and proprietary fashion apparel, accessories
and home fashion merchandise,
x Sourcing a wide range of key brands and maintaining strong partnerships with the vendors representing those brands,
x Offering everyday low prices on fashion merchandise through buying methodologies and low cost operations,
x Attracting repeat and new customers through marketing and advertising programs,
x Having an attractive store appearance, appealing merchandise presentation and on-demand customer service, similar to a
department or specialty store, and
x Locations in regional, community and neighborhood shopping centers serving a more affluent customer.
TARGET CUSTOMER
Our target customer is a 35-55 year old woman who is both style conscious and value seeking. She is typically married and college
educated. She may be multi-cultural, works at least part-time in a professional position and has above-average household income.
MERCHANDISING, PURCHASING AND PRICING
Our fashion assortment is driven primarily by seasonal fashion trends and a focus on name brand and designer merchandise
complemented by a select program of private label and proprietary/exclusive merchandise. In 2012, approximately 10 percent of our sales
were from private label or proprietary/exclusive merchandise. The majority of merchandise is consistent from store to store, with
exceptions based on individual store selling characteristics, seasonal delivery fluctuations and regional preferences.
Our merchants purchase products from approximately 1,200 vendors. None of our vendors accounted for more than 5 percent of our total
purchases during 2012. We buy a majority of our merchandise at the same time and from many of the same manufacturers as traditional
department/specialty stores although we generally do not require the same level of front and back-end vendor concessions, such as
advertising allowances, return privileges and markdown allowances, which are common and significant in the department store industry.
As a result, we believe that our buyers are able to negotiate more favorable upfront pricing terms from vendors. We also purchase
merchandise opportunistically when we believe a combination of the product and the price makes it a compelling addition to our
assortment. In both instances, we reflect our savings in our pricing which passes on to our customers through everyday low pricing
targeted to be competitive with off-price retail chains.
Our shoe department inventory is exclusively supplied and owned by DSW, Inc. (“DSW”). DSW’s buyers determine each season’s fashion
footwear assortment. We operate the shoe department and receive a percentage of net revenue in accordance with a supply agreement
(the “Supply Agreement”). Commissions from this leased department are included in Net sales reported in our Consolidated Statements of
Income.